The Parliament of Uganda has passed a proposed new law that imposes a 5 percent tax on the income earned in the country by foreign digital companies such as Facebook and Twitter.
Other companies affected by the new tax contained in Income Tax Amendment Bill, 2023 include Google, Amazon, and Uber, and any foreign-owned company offering services such as data, online gaming, accessing and downloading of digital content, and data warehousing.
“The Income Tax (Amendment) Bill, 2023 will tax non-resident providers of digital services in Uganda such as Facebook, Twitter, Amazon, Netflix, etc,” Parliament said in a brief statement on Twitter Tuesday evening.
Some legislators, however, criticised the Bill, saying it might lead to an increase in the prices of internet services and gag social media users. The finance committee of Parliament insisted that the Bill “is not a social media tax and will not affect an ordinary Ugandan in any way,” according to the statement.
Parliament first passed the proposed law in May, but rejected the social media tax on the premise that it would negatively affect Internet users. President Museveni, however, in a letter read to the House on June 29, disagreed with the legislators’ reasoning and thus declined to assent to the Bill, recommitting the clause.
“Since it does not relate to residents in Uganda as was mistakenly in the minority report, it should be reinstated. The tax will be borne by the digital companies,” the President said.
In its report presented to the House yesterday, the Parliament Committee on Finance agreed with Mr Museveni.
“For emphasis, the committee noted that this is not a social media tax and will not affect an ordinary Ugandan in any way,” the committee stated.
It added: “If a Ugandan uses Uber in Uganda, the money goes to California and no tax is paid here because we do not have a charging section or source rule. Through this proposal, five percent of the money Ugandans pay to use Uber’s platform shall be reduced as a tax credit from the state of California.”
